salton sea funding and feasibility action plan

Salton Sea Funding and Feasibility Action Plan

Benchmark 5: Infrastructure Financing FeasibilityAnalysisVolume 1: Main Report, May 2016

Prepared by: Prepared for:

This document is prepared as a living document forpublic review and comment. Comments may be

provided to:

Salton Sea Authority82995 Hwy 111, Suite 200

Indio, CA 92201

Email: [email protected]

Comments will be reviewed and incorporated asappropriate. If substantive comments are received, arevised document may be produced and distributed.

DPFG Team i May 2016

Executive Summary

The Salton Sea Authority (“Authority”) has jurisdiction over approximately

300,000 acres adjacent to the Salton Sea in Riverside and Imperial Counties.

The Authority has statutory authority to form Infrastructure Financing

Districts (“IFD”) in part or all of the Authority’s area “for the purpose of

funding the construction of, and purchasing power for, projects for the

reclamation and environmental restoration of the Salton Sea…”(Calif. Gov.

Code 53395.9). This “Feasibility Study” assumes that IFDs will be funded by

property tax increments generated by development that is enabled by the

funded seaside infrastructure. The Feasibility Study also considers the

potential for sales tax and transient occupancy tax revenues.

Formation of an IFD requires a number of steps, one of which is the

preparation of an infrastructure-financing plan (Section 53395.14). The

Authority is asserting a leadership role in spearheading a reconnaissance level

analysis of the feasibility of forming one or more Enhanced Infrastructure

Financing Districts (“EIFD”s), Infrastructure and Revitalization Financing

Districts (“IRFD”s), or a combination of both EIFDs and IRFDs (collectively

referred to as “IFD”s), depending on existing legislation at the time of

implementation. As the Salton Sea recedes, it is anticipated that the

Authority will have the ability to fashion the Salton Sea along the former

shoreline with combinations of dikes and dredging to produce water features

that will be able to sustain recreationally attractive water near the shoreline

(“Seaside Improvements”).

This Feasibility Study has been prepared to analyze and determine the

following:

1. Total estimated revenues generated by development attracted bythe recreational water and Seaside Improvements (“LandsideDevelopment”)

2. Total estimated Seaside Improvement costs that can be repaid withsuch revenues

Sources and Uses SummaryThis Feasibility Study analyzes the estimated sources generated by the

Landside Development and the amount of estimated Seaside Improvement

costs that could be paid back with these sources. Four scenarios (1A, 1B, 2A,

2B) have been prepared to look at the impacts of the following:

Salton Sea Funding and Feasibility Action PlanInfrastructure Financing Feasibility Analysis

May 2016 ii DPFG Team

__Executive Summary

• Percentage of the tax increment available to the IFD after making

statutory deductions for ERAF and schools

• Remaining amount of tax increment allocated to the IFD and local

affected taxing agencies to provide basic services such as police and

fire. (Chapter 2.2.1 provides a description of the allocation of the 1%

ad valorem property taxes)

• Interest rate, if required, paid back on State, Federal, or other loans

obtained to fund the Seaside Improvement costs

The funds potentially available for Seaside Improvements and the interest tobe paid for the four scenarios are summarized in Table 1. These funds maysupport Seaside Improvements in part or in total. The total fundingrequirements for Seaside Improvements are not defined as part of thisdocument, and are addressed separately (Benchmark 4, Volume 2).

Table 1: Sources and Uses Summary

Sources and Uses DetailThe Feasibility Study looks at a variety of revenue sources that may be appliedto repay the costs of the Seaside Improvements in part or in total. Theserevenue sources become available as Landside Development occurs andinclude, but are not limited to, the following:

• IFD Net Bond Proceeds (Chapter 2.2.2)

• IFD Tax Increment and Pay Go revenues (Chapters 2.2.1 and 2.2.3)

• Transient Occupancy Tax (“TOT”) revenues (Chapter 2.2.4)

• Sales Tax revenues (Chapter 2.2.5)

The estimated revenue amounts, by type and scenario, are illustrated in Table2.

($ Millions)

Scenario Ref 1A 1B 2A 2B

IFD % Available 2.2.1 50% 50% 25% 25%

Interest Rate - State/Fed/Other 2.4 3% 0% 3% 0%

Total Sources 2,224.2$ 2,224.2$ 1,760.2$ 1,760.2$

Uses:

2.4 904.5$ 2,224.2$ 715.8$ 1,760.2$

Interest 2.4 1,319.8 - 1,044.4 -

Total Uses 2,224.2$ 2,224.2$ 1,760.2$ 1,760.2$

(a) 10 year timline. Annual costs spread evenly over ten year period.

Funding Available for

Seaside Improvements (a)


DPFG Team iii May 2016

Executive Summary__

Study PeriodThe Feasibility Study financial model allows for the following time horizons,

assuming year 0 to be the formal beginning of the planning:

• Two years of planning and California Environmental Quality Act

(CEQA) planning and evaluation of projects, followed by ten years of

construction related to Seaside Improvements

• Fifty years of Landside Development based on annual absorption of

1,475 residential units (See Chapter 5)

Table 2: Sources and Uses Detail

50 Year Landside Development PeriodAssuming a 50-year Landside Development period commencing in year 8 and

continuing through year 57, Table 3 and Figure 1 illustrate in five year

increments, the cumulative annual IFD tax increment and revenue source

additions generated by the Landside Development. The cumulative annual

revenue sources are shown graphically in Figure 2.

($ Millions)


IFD % Available 2.2.1 50% 50% 25% 25%


Sources:

IFD Net Bond Proceeds 2.2.2 570.1$ 570.1$ 276.2$ 276.2$

Tax Increment/Pay Go 2.2.3 340.4 340.4 170.2 170.2

TOT Revenues 2.2.4 920.4 920.4 920.4 920.4

Sales Tax Revenue 2.2.5 393.4 393.4 393.4 393.4

Total Sources 2,224.2$ 2,224.2$ 1,760.2$ 1,760.2$

Uses:

2.4 904.5$ 2,224.2$ 715.8$ 1,760.2$

Interest/Other Costs 2.4 1,319.8 - 1,044.4 -

Total Uses 2,224.2$ 2,224.2$ 1,760.2$ 1,760.2$





May 2016 iv DPFG Team

__Executive Summary

Table 3: Tax Increment and Revenue Sources (Scenario 1)

Figure 1: Cumulative IFD Tax Increment (TI) by county for Scenario1

($ Millions)

Period IFD Tax Increment Sources

Riv Imp Total

Bond

Sale

Pay

Go

TOT

Revenues

Sales

Tax

Energy

Revenues Total

Years

1-5 -$ -$ -$ -$ -$ -$ 0.1$ -$ 0.1$

6-10 1.2 0.7 1.9 7.1 0.6 1.5 4.4 - 13.7

11-15 6.1 3.7 9.8 12.9 3.0 8.8 12.5 - 37.3

16-20 11.8 7.0 18.8 14.5 5.8 27.2 23.5 - 71.0

21-25 18.1 10.8 28.8 16.2 9.0 63.8 34.7 - 123.6

26-30 25.0 14.9 39.9 18.0 12.4 107.0 41.5 - 178.9

31-35 32.6 19.5 52.1 20.1 16.2 120.6 46.3 - 203.1

36-40 41.1 24.5 65.6 33.3 20.3 130.1 50.4 - 234.2

41-45 50.4 30.0 80.4 39.9 25.0 135.2 52.7 - 252.7

46-50 60.7 36.2 96.8 44.2 30.1 135.9 53.0 - 263.2

51-55 72.0 43.0 115.0 49.0 33.4 135.9 53.0 - 271.3

56-60 32.2 19.2 51.5 21.0 14.5 54.4 21.2 - 111.1

TOTAL 702.2$ 418.9$ 1,121.2$ 570.1$ 340.4$ 920.4$ 393.4$ -$ 2,224.2$


DPFG Team v May 2016

Executive Summary__

Figure 2: Cumulative Revenue Sources (Scenario 1)

Funding GapThe revenue sources identified above are generated from Landside

Development spurred by stabilized, recreationally attractive water. This

Feasibility Study assumes that Landside Development will not be triggered

until after Seaside Improvement costs have been incurred, creating a

“Funding Gap” between the time costs are incurred and Landside

Development revenue sources become available. Other forms of financing

(e.g. state funding, state loans, federal grants, etc.) will be required to bridge

the Funding Gap until IFD tax increment and other Landside Development

revenue sources become available.

Table 4 illustrates the Funding Gap between the timing of Seaside

Improvements and Landside Development revenue sources, as well as loan

additions and repayment, assuming a 3.0% interest-bearing loan, to bridge

the Funding Gap. There is a funding gap in a general sense, but it cannot be

quantified fully until the seaside improvement costs are known. This table has

been included for illustration purposes only, as the total funding

requirements for Seaside Improvements are not defined as part of this

document, and are addressed separately (Benchmark 4, Volume 2).


May 2016 vi DPFG Team

__Executive Summary

Table 4: Annual Sources Uses and Seaside Improvement Costs. Highlighted boxshows period with funding gap.

Next StepsThe results of this Feasibility Study are subject to change based on the

assumptions contained herein, and discussed in the attached Appendices.

This Feasibility Study analyzes possible revenue sources that may be available

to fund Seaside Improvements. Additionally, the estimated costs of the

Seaside Improvements have not been calculated as part of this Feasibility

Study, as such, any results are simply an illustration of potential scenarios.

Suggested next steps to move forward with infrastructure financing would

include the following:

• Work with the Authority to identify Seaside Improvement costs

• Further analysis of the IFD allocation and preparation of the fiscal

impact analysis

• IFD bonding assumptions (e.g. interest rate and debt service

coverage)

• Development scenarios including timing of absorption

• Implementation steps for IFD

• Extend development scenario to 75 years

($ Millions)

Uses

Period

Total

Sources

Loan

Additions

Interest

@ 3.0%/

Other

Loan

Repayment

Funding

Available for

Seaside

Improvements (a)

Years

1-5 0.1 308.5$ 18.4$ -$ 308.6$

6-10 22.4 403.2 84.1 - 425.6

11-15 55.0 151.7 147.2 (36.4) 170.2

16-20 93.1 - 164.8 (93.1) -

21-25 150.5 - 172.0 (150.5) -

26-30 211.1 - 170.4 (211.1) -

31-35 241.1 - 161.4 (241.1) -

36-40 289.6 - 145.3 (289.6) -

41-45 319.2 - 119.6 (319.2) -

46-50 339.2 - 86.2 (339.2) -

51-55 355.5 - 44.6 (355.5) -

56-60 147.3 - 5.7 (144.8) -

TOTAL 2,224.2$ 863.4$ 1,319.8$ (2,180.6)$ 904.5$


DPFG Team vii May 2016

Acronyms and Abbreviations

Acronyms and abbreviations used in the Benchmark 5: Infrastructure

Financing Feasibility Analysis are listed below.

ATEs Affected Taxing AgenciesCEQA California Environmental Quality ActCFD Community Facilities DistrictCVWD Coachella Valley Water DistrictEIFD Enhanced Infrastructure Financing DistrictERAF Educational Revenue Augmentation FundIFD Infrastructure Financing DistrictIID Imperial Irrigation DistrictIRFD Infrastructure and Revitalization Financing DistrictPFA Public Financing AuthorityRDA Redevelopment AgencyROI Resolution of IssuanceTOT Transient Occupancy TaxesVLF Motor Vehicle in-lieu Fees


May 2016 viii DPFG Team

__Acronyms and Abbreviations

This page is intentionally left blank.

DPFG Team ix May 2016

Table of Contents

1.0 Introduction and Background .......................................................1

1.1 Introduction and Background................................................ 1

1.2 Five Key Factors..................................................................... 1

2.0 Financial Feasibility Analysis.........................................................5

2.1 Key Conclusions and Scenario Summary............................... 5

2.2 Revenue Sources ................................................................... 7

2.3 IFDs - EIFD vs. IRFD ..............................................................11

2.4 Funding Gap and Matching Fund Concept..........................13

2.5 Summary of Supporting Exhibits .........................................16

3.0 Tourism Demand Impact Analysis...............................................19

3.1 Introduction.........................................................................19

3.2 Tourist Demand Forecast, North Area, 2022-2075 .............19

3.3 Tourist Demand Forecast, South Area, 2022-2062 .............22

3.4 Transient Occupancy and Sales Taxes, 2022-2075,.............24

3.4.1 Transient Occupancy Tax Revenue.........................24

3.4.2 Sales Tax Revenue ..................................................25

4.0 Salton Sea Recreation Opportunities ..........................................27

4.1 Introduction.........................................................................27

4.2 Opportunity Area 1..............................................................28

4.2.1 North Shore Yacht Club ..........................................28

4.2.2 Salton Sea State Recreation Area...........................28


4.3.1 Travertine Point......................................................31

4.3.2 Torres Martinez Tribe — WetlandHabitat....................................................................32

4.3.3 Duck Ponds .............................................................32

4.3.4 North Lake Village ..................................................33

4.3.5 Salton Sea North Lake ............................................33


4.4.1 Desert Shores .........................................................33

4.4.2 Salton City...............................................................34

4.5 Opportunity Areas 4 / 5.......................................................35

4.5.1 South Lake Village ..................................................35

4.5.2 Sony Bono National Wildlife Refuge ......................36

4.5.3 Salton Sea South Lake ............................................37


May 2016 x DPFG Team

_Table of Contents


4.6.1 Bombay Beach Community ....................................38

4.7 Recreational Opportunities Matrix......................................39

5.0 Market Study and Land-Use Analysis ..........................................41

5.1 Introduction.........................................................................41

5.2 Scale of Future Development ..............................................41

5.2.1 Riverside County.....................................................41

5.2.2 Imperial County ......................................................43

5.3 Demand Capture and Absorption Potential ........................45


5.3.2 Imperial County ......................................................46

5.4 Value of Landside Development..........................................47


5.4.2 Imperial County ......................................................47

6.0 Bibliography ..............................................................................49

List of Appendices Provided in Volume 2

Appendix 1: Financial Feasibility Analysis

Appendix 2.1: Tourist Demand Forecast Salton Sea Lake – North

Appendix 2.2: Tourist Demand Forecast Salton Sea Lake – South

Appendix 2.3: TOT & Sales Tax Estimates – Salton Sea Project

Appendix 3: Salton Sea Recreation Opportunities

Appendix 4: Market Study and Land Use Analysis to Assess the RealEstate Impact of Restoring the Salton Sea to a ViableRecreational Resource

List of Figures

Figure 1: Cumulative IFD Tax Increment (TI) by county forScenario1 ....................................................................................... iv

Figure 2: Cumulative Revenue Sources (Scenario 1) .....................................v

Figure 3: Feasibility Study Area and Opportunity Areas................................3

Figure 4: IFD and CFD Collection..................................................................14

Figure 5: Salton Sea Recreation Opportunity Areas ....................................27

Figure 6: Opportunity Area 1 .......................................................................29

Figure 7: Opportunity Area 2 .......................................................................31


DPFG Team xi May 2016

Table of Contents__

Figure 8: Opportunity Area 3.......................................................................34

Figure 9: Opportunity Areas 4 and 5 ...........................................................36

Figure 10: Opportunity Area 6.......................................................................38

List of Tables

Table 1: Sources and Uses Summary............................................................... ii

Table 2: Sources and Uses Detail.................................................................... iii

Table 3: Tax Increment and Revenue Sources (Scenario 1) ........................... iv

Table 4: Annual Sources Uses and Seaside Improvement Costs.Highlighted box shows period with funding gap. .......................... vi

Table 5: Five Key Factors ................................................................................. 2

Table 6: Consulting Team Reports and Analysis.............................................. 2

Table 7: Sources and Uses Detail..................................................................... 6

Table 8: Impact of Adjusted TOT, Sales Tax, and IFD Bond InterestRate (Scenario 1) ............................................................................ 6

Table 9: Estimated IFD Tax Increment Revenues ............................................ 7

Table 10: Allocation of IFD Tax Collections ..................................................... 8

Table 11: Estimated IFD Net Bond Proceeds................................................... 8

Table 12: Estimated Pay Go............................................................................. 9

Table 13: Estimated TOT Revenues...............................................................10

Table 14: Impact of Adjusted TOT Revenues ................................................10

Table 15: Estimated Sales Tax Revenue ........................................................10

Table 16: Impact of Adjusted Sales Tax Revenues ........................................11

Table 17: IFDs – IRFD vs. EIFD........................................................................12

Table 18: CFD Bond Proceeds........................................................................16

Table 19: Summary of Financial Feasibility Analysis Exhibits ........................17

Table 20: Recreational Opportunities Matrix................................................40

Table 21: Total Developable Acres ................................................................42

Table 22: Total Potential Future Residential Supply .....................................43

Table 23: Opportunity Area 3........................................................................43

Table 24: Opportunity Area 3 Urban Area Development..............................44

Table 25: Opportunity Area 3 Planned and Vacant Parcel ............................44

Table 26: Opportunity Areas 4, 5, and 6 Developable LandBreakdown....................................................................................45

Table 27: Opportunity Areas 4, 5, and 6 Total Potential ResidentialUnits..............................................................................................45


May 2016 xii DPFG Team

_Table of Contents


DPFG Team 1 May 2016

1.0 Introduction and Background

The Infrastructure Financing Feasibility Study was undertaken to

determine if Landside Development could be a major funding source for

Seaside Improvements. Objectives for this initiative are outlined, and the

key tasks performed to create a comprehensive analysis are explained.

1.1 Introduction and BackgroundIn response to the Authority’s Request for Proposal No. 15-01 dated June 3,

2015 (“RFP No. 15-01”), the Salton Sea Action Committee (“SSAC”) assembled

a consulting team (“Consulting Team”) consisting of the following:

• Development Planning and Financing Group (“DPFG”)

• The Concord Group (“TCG”)

• Economics and Politics Inc. (“E & P”)

• FORMA (“FORMA”)

1.2 Five Key FactorsIn preparing the Feasibility Study, five key factors (“Key Factors”) were

evaluated to enable the development of estimates of the potential financing

opportunity to support a long-term Salton Sea management program. Table

5 outlines the Key Factors and the corresponding chapters and

appendices/exhibits where the analysis is contained.

Consulting Team Reports and Analysis

The Consulting Team prepared a series of reports and analysis to address the

Key Factors, and ultimately determine the estimated Landside Development

revenues and Seaside Improvement costs (partial or total) that can be repaid

with such revenues. These reports and key conclusions are summarized

within the chapters of this Feasibility Study. Detailed reports and analysis

have been attached as appendices. The report chapters and appendices are

organized as shown in Table 6.

Feasibility Study Area

The Consulting Team identified land surrounding the Salton Sea within the

Riverside and Imperial Counties that would support Landside Development

attracted to a stabilized, recreational body of water (“Feasibility Study Area”).

The Feasibility Study Area was then separated into distinct opportunity areas

1.0 Introduction andBackground

1.1 Introduction andBackground

1.2 Five Key Factors


May 2016 2 DPFG Team

Introduction and Background

1, 2, 2a, 3, 4, 5 and 6 (collectively “Opportunity Areas”) for purposes of

preparing the Feasibility Study.

Table 5: Five Key Factors

Key Factors Chapter Appendix/Exhibit

i. Scale and Type of Development that isAnticipated Based on the Improvements

3, 4, 5 App 2.1; Ex 15App 2.2; Ex 11

App 3App 4; Ex I-16-AApp 4; Ex I-16-B

ii. The Value of this Land-Side Development 5 App 4; Ex I-16-AApp 4; Ex I-16-B

App 1; Ex F, I

iii. The Property Tax Increment Generated bythat Development

2 App 1; Ex E

iv. The Market Absorption Rate of thatDevelopment

5 App 4; Ex I-15-AApp 4; Ex I-15-BApp 1; Ex G, H

v. The Cost of Public Infrastructure Requiredto Support that Development Scenario

2, 5 App 1; Ex LApp 4; Ex I-17B-iApp 4; Ex I-17B-ii

Table 6: Consulting Team Reports and Analysis

Report AnalysisChapter

RefAppendix

Ref

Financial FeasibilityAnalysis

• Landside Developmentrevenue sources

• Seaside Improvement costcapacity

• Gap Funding

• IFD tax increment analysis

• IFD bonding capacity

• CFD bonding capacity

2 1

Tourist DemandImpact Analysis

• Tourism demand andeconomic analysis

• TOT revenues

• Sales tax revenues

3 2

Salton Sea RecreationOpportunities

• Identification of recreationalopportunity areas

4 3

Market Study andLand Use Analysis

• Residential and non-residential demand andabsorption

• Value additions

• Residual value

5 4

A map of the Feasibility Study Area and Opportunity Areas is shown in Figure

3.



Introduction and Background__

Figure 3: Feasibility Study Area and Opportunity Areas



Introduction and Background



2.0 Financial Feasibility Analysis

The Financial Feasibility Analysis pulls together the collective work of

the Consulting Team. Reports and studies are referenced and relied

upon to determine estimated Landside Development revenues assuming

various scenarios. IFD funding alternatives, and the Gap Funding

necessary prior to IFD funding and other Landside Development revenue

sources becoming available are also discussed.

2.1 Key Conclusions and Scenario SummaryThe Financial Feasibility Analysis pulls together the collective work of the

Consulting Team to determine the following:

1. Total estimated revenues generated by Landside Development

2. Total estimated Seaside Improvement costs that can be repaid with

such revenues

In an effort to calculate the estimated Landside Development revenues and

the capacity to fund Seaside Improvement costs with such revenues, four

scenarios have been prepared to look at the impacts of the following:

• Percentage of the tax increment available to the IFD after making

statutory deduction for ERAF and schools

• Remaining amount of tax increment allocated to the IFD and local

affected taxing agencies to provide basic services such as police and

fire. (Chapter 2.2.1 provides a description of the allocation of the 1%

ad valorem property taxes)

• Interest rate, if required, paid back on State, Federal, or other loans

obtained to fund the Seaside Improvement costs

The results of the four scenarios are shown in Table 7.

2.0 FinancialFeasibilityAnalysis

2.1 Key Conclusionsand ScenarioSummary

2.2 Revenue Sources

2.3 IFDs - EIFD vs.IRFD

2.4 Funding Gap andMatching FundConcept

2.5 Summary ofSupporting Exhibits



Financial Feasibility Analysis

Table 7: Sources and Uses Detail

Scenarios 1 and 2 assume that 100% of the transient occupancy tax (“TOT”)

and sales tax revenues generated by Landside Development is available to

fund Seaside Improvements. In addition to Scenarios 1 and 2, the impacts of

reduced TOT and sales tax revenues were prepared based on the following

assumptions:

• IFD bond interest rates ranging from 7% to 5% (Note: The Table 1 rate

of 3.0% is based on the lower interest costs assumed for a loan from

the state or federal government.)

• Percentage of TOT and sales tax available to fund Seaside

Improvement costs ranging from 100% to 25%.

Table 8 summarizes the impact to the total revenue sources.

Table 8: Impact of Adjusted TOT, Sales Tax, and IFD Bond Interest Rate (Scenario 1)

($ Millions)


IFD % Available 2.2.1 50% 50% 25% 25%


Sources:

IFD Net Bond Proceeds 2.2.2 570.1$ 570.1$ 276.2$ 276.2$

Tax Increment/Pay Go 2.2.3 340.4 340.4 170.2 170.2

TOT Revenues 2.2.4 920.4 920.4 920.4 920.4

Sales Tax Revenue 2.2.5 393.4 393.4 393.4 393.4

Total Sources 2,224.2$ 2,224.2$ 1,760.2$ 1,760.2$

Uses:

2.4 904.5$ 2,224.2$ 715.8$ 1,760.2$

Interest/Other Costs 2.4 1,319.8 - 1,044.4 -

Total Uses 2,224.2$ 2,224.2$ 1,760.2$ 1,760.2$




($ Millions)

% of TOT and Sales TaxAvailable to Seaside

Improvement Costs 7% 6% 5%

100% $ 2,161.7 $ 2,224.2 $ 2,298.3

75% $ 1,833.3 $ 1,895.8 $ 1,969.9

50% $ 1,504.8 $ 1,567.3 $ 1,641.5

25% $ 1,176.4 $ 1,238.9 $ 1,313.0

Total Revenue SourcesIFD Bond Interest Rate



Financial Feasibility Analysis_

2.2 Revenue Sources

Study Period

The Financial Feasibility Analysis allows for the following time horizons:

• Two years of planning and CEQA and ten years Seaside Improvement

construction

• 50 years of Landside Development based on annual absorption of

1,475 residential units (See Chapter 5, Exhibits I-15-A and I-15-B of

Appendix 4, and Exhibit G of Appendix 1)

• Seaside Improvement and Landside Development timing horizons

are illustrated on Exhibit B of Appendix 1

• It is anticipated the Landside Development will generate revenue

sources used to repay Seaside Improvement. The Scenario 1 and

Scenario 2 revenues sources are discussed in the following chapters

2.2.1 IFD Tax Increment

IFD tax increment is generated from the additional assessed value created by

the Landside Development. The estimated IFD tax increment revenues are

summarized in Table 9.

Table 9: Estimated IFD Tax Increment Revenues

The following assumptions were used in determining the IFD tax increment:

• Annual Landside Development value additions per the Market Study

and Land Use Analysis (See Exhibits I-15A and I-15B of Appendix 4)

o 50 years of Landside Development commencing in year 8 and

continuing through year 57

• Gross Riverside County IFD tax collections totaling 24.38% of 1%

o Reviewed the allocation of the 1.0% for tax rate areas 058-

002 and 058-011, and used the highest Coachella Valley USD

amount of the studied areas

• Gross Imperial County IFD tax collections totaling 40.05% of 1%

($ Millions)

Scenario Ex. 1 2

Tax Increment E 1,121.2$ 560.6$




o Per the Imperial County Auditor-Controller’s Office.

Represents a countywide average due to varying school

district amounts.

• 50% of the gross IFD tax collections available for IFD funding purposes

for Scenario 1 and 25% for Scenario 2

• Remaining IFD tax collections available to local affected taxing

agencies to provide basic services such as police and fire.

• For purposes of this Feasibility Study, IFD tax increment is assumedto fund Seaside Improvements only. No IFD tax increment isallocated to the funding of Landside Development. See furtherdiscussion in Chapter 2.5.

The allocation of the IFD tax collections is illustrated in Table 10.

Table 10: Allocation of IFD Tax Collections

2.2.2 IFD Net Bond Proceeds

IFD net bond proceeds were calculated based on available IFD tax increment.

The estimated IFD net bond proceeds are summarized in Table 11.

Table 11: Estimated IFD Net Bond Proceeds

The following assumptions were used in calculating the IFD net bond

proceeds:

• Full 30 year term bonds

o This assumes the ability to set the IFD clock as development

occurs via an IRFD or amended EIFD

o See discussion of EIFD vs IRFD legislation in Chapter 2.3, and

Exhibit M of Appendix 1

IFD Tax Increment

Allocation of IFD Tax Collections:

Riverside

County

Imperial

County

Gross County IFD Tax Collections 24.38% 40.05%

% to Local Agencies 50.00% 50.00%

Net Available for IFD Funding 12.19% 20.03%

($ Millions)

Scenario Ex. 1 2

IFD Net Bond Proceeds D 570.1$ 276.2$




• Annual bond issuances, commencing with the first year of Landside

Development, to capture additions to value

• IFD bond interest rate of 6.0%

• Debt service coverage of 145% (Secures debt with tax incrementfrom project areas and maintains a minimum coverage ratio of$1.45 in tax increment per $1 in debt service for any given year).

• A financing authority to capture increment from multiple IFDs, similar

to merged project area financing used by RDAs

• Additional assumptions are discussed in Exhibit D of Appendix 1

2.2.3 Pay Go

Pay Go represents tax increment not used to pay IFD bond debt service. The

estimated Pay Go revenues are summarized in Table 12.

Table 12: Estimated Pay Go

The following assumptions were used in calculating the Pay Go revenues:

• 45 years of tax increment for each bond series to simulate the 45 year

time clock of an EIFD

• Pay Go revenues could be used for the following:

o Fund Seaside Improvements

o Pay for enhancements or restoration of Seaside

Improvements

o Pay for other eligible Seaside Improvements

2.2.4 Transient Occupancy Tax (TOT) Revenue

TOT is a tax charged for the privilege of occupancy in any hotel, motel, or

other lodging facility. Scenario 1 and Scenario 2 estimated TOT revenues are

summarized in Table 13.

($ Millions)

Scenario Ex. 1 2

Pay Go D 340.4$ 170.2$




Table 13: Estimated TOT Revenues

The following assumptions were used in calculating the Scenario 1 and

Scenario 2 TOT revenues:

• Hotel demand, revenues and TOT estimates from the Tourist

Demand Impact Analysis (See Exhibits 1 and 2 of Appendix 2.3)

• 10.0% TOT rate for Riverside County per the Treasurer-Tax Collector

• 8.0% TOT rate for Imperial County per the Treasurer-Tax Collector

• Assumes full TOT allocation is available for funding purposes

In addition to Scenarios 1 and 2, the impacts of reduced TOT revenues were

prepared based on the percentage of TOT revenues available to fund Seaside

Improvement costs ranging from 100% to 25%.

Table 14 summarize the impact to the total TOT revenues.

Table 14: Impact of Adjusted TOT Revenues

2.2.5 Sales Tax Revenue

The estimated sales tax revenues are summarized in Table 15.

Table 15: Estimated Sales Tax Revenue

($ Millions)

Scenario Ex. 1 2

TOT Revenues K 920.4$ 920.4$

($ Millions)

% of TOT TotalAvailable to Seaside Tot

Improvement Costs Revenues

100% $ 920.4

75% $ 690.3

50% $ 460.2

25% $ 230.1

($ Millions)

Scenario Ex. 1 2

Sales Tax Revenue J 393.4$ 393.4$




The following assumptions were used in calculating the sales tax revenues:

• Total sales and sales tax amounts obtained from the Tourist Demand

Impact Analysis (See Exhibits 3A-3C of Appendix 2.3)

• Assumes full sales tax allocation is available for funding purposes

In addition to Scenarios 1 and 2, the impacts of reduced sales tax revenues

were prepared based on the percentage of sales tax revenues available to

fund Seaside Improvement costs ranging from 100% to 25%.

Table 16 summarizes the impact to the total sales tax revenues.

Table 16: Impact of Adjusted Sales Tax Revenues

2.3 IFDs - EIFD vs. IRFDThe Financing Feasibility Analysis assumes that IFD bonds are issued annually

commencing with the first year of Landside Development. It is assumed that

each of the bond series will have a 30-year bond term.

• This approach could include a combination of EIFD and IRFD financing

mechanisms and may require changes to existing legislation

• Based on current law, EIFDs have a 45 year tax increment limit and

do not allow for separate project areas (within the same EIFD, we

could set up multiple EIFDs (This is somewhat cumbersome with

current law).

• However, IRFDs allow for separate 40 year tax increment clocks for

each Project Area (i.e., commencement dates to start the clock) as

development moves along. This is one of the benefits of IRFDs vs.

EIFDs.

Table 17 has been prepared to summarize certain key differences between

an IRFD and an EIFD based on current legislation.

($ Millions)

% of Sales Tax TotalAvailable to Seaside Sales Tax

Improvement Costs Revenues

100% $ 393.4

75% $ 295.0

50% $ 196.7

25% $ 98.3




Table 17: IFDs – IRFD vs. EIFD

Description

Infrastructure and Revitalization FinancingDistrict (“IRFD”)

AB 229

Enhanced Infrastructure Financing District(“EIFD”)SB 628

Code Government Code Section 53369 et seq. Government Code Section 53398.50 et seq.

Agency Type City, County or Joint Powers Authority • Newly created Public Financing Authority(“PFA”)

• Membership may include affected taxingagencies (“ATEs”)

Election • Generally, the same as a CFD formation,including ballot specifications, waivers ofelection formalities and timing,appropriations limit, 2/3 vote required,landowner versus registered voterelections, etc.

• An election is required only for bondauthorization; the bond authorizationelection is generally the same as a CFDformation. However, only 55% of thevote is required to approve themeasures.

Bond Issuance • Legislative body may, by a majority vote,initiate proceedings to issue bonds byadopting a resolution of issuance (“ROI”)to issue bonds.

• Bonds may be issued if 55 percent of thevoters voting on the proposition vote infavor of issuing the bonds. Note: Districtcould be formed, but bonds could bevoted down.

• The PFA may, by a majority vote, initiateproceedings to issue bonds by adoptingROI to issue bonds.

Creation of Project Areas • May be divided into any number ofproject areas.

• Project areas not permitted, meaningnew EIFDs would need to be created toachieve similar distinct limitations.

Annexation of Property • Permitted • Not Permitted

Tax Increment Limits • 40 years from the date on which theordinance is adopted

• or a later date, if specified by theordinance, on which the allocation of taxincrement will begin

• 45 years from the date on which theissuance of bonds is approved

Eligible Facilities • Useful life of 15 years or longer

• facilities with community widesignificance

• Don't need to be located in boundariesof IRFD

• Useful life of 15 years or longer

• Public capital facilities with communitywide significance

• Don't need to be located inboundaries of IRFD

Maintenance • May not finance routine maintenance,repair work, or the costs of ongoingoperation or providing services of anykind.

• May not finance routine maintenance,repair work, or the costs of ongoingoperation or providing services of anykind.

Affordable Housing • If the IRFD constructs dwelling units, itshall set aside not less than 20% ofsuch units to increase supply oflow/moderate income housing at anaffordable cost or at an affordablerent.

• None

Motor Vehicle in-lieu Fees(“VLF”)

• VLF revenue can’t be pledged. • VLF revenues may be pledged.




2.4 Funding Gap and Matching Fund Concept• Revenue sources included in the Financial Feasibility Analysis are

generated from Landside Development spurred by recreationally

attractive water.

• Based on the analysis and conclusions reached in the Tourist Demand

Impact Analysis (Appendix 3) and the Market Study and Land Use

Analysis (Appendix 4), Landside Development will not be triggered

until after Seaside Improvement costs have been incurred.

• A Funding Gap is created between the time costs, not determined in

this Feasibility Study, are incurred and Landside Development

revenue sources become available.

• Other forms of financing (e.g. state funding, state loans, federal

grants, etc.) will be required to bridge the Funding Gap until tax

increment and other Landside Development revenue sources

become available.

• Scenario 1A and Scenario 2A assume a loan with a 3.0% interest rate

to bridge the Funding Gap

Exhibit B of Appendix 1 illustrates the Funding Gap concept. The actual

Funding Gap amount may not be estimated until after the Seaside

Improvement costs have been determined, as further discussed in

Benchmark 4, Volume 2.

• Timing of annual revenue and cost assumptions

• Calculates the estimated Seaside Improvement costs that could be

repaid with Landside Development revenue sources

• Actual Seaside Improvement costs not repaid with Landside

Development revenue sources will require other sources of funding

• Local matching funds from federal, state and other local sources may

be required to fully fund actual Seaside Improvement costs

• Exhibit C of Appendix 1 provides a summary roll-up of the Exhibit B

Funding Gap analysis in five-year increments.

• Cost of Public Infrastructure Required to Support Development

Scenario (Landside Improvements)

Funding Tools for Seaside Improvements vs. Landside Development

Funding tools for seaside improvements and landside development are

discussed below:




• For purposes of this Study, the IFD is assumed to fund Seaside

Improvements only. No tax increment is allocated to the funding of

Landside Development

• With regard to property taxes, the IFD is below the 1% line

• CFD taxes to fund Landside Development infrastructure are above

the 1% line

• There is a tradeoff between funding for basic services (e.g., police and

fire) or fiscal impacts. Scenarios 1A and 1B show 50% to the IFD, while

Scenarios 2A and 2B show 25% to the IFD (75% to local agencies)

• One of the requirements of preparing the Infrastructure Financing

Plan is an analysis of the projected fiscal impact of the IFD upon the

County. This will need to be performed in the implementation of and

IFD

Figure 4 describes the IFD tax allocation and CFD collection, illustrating that

only a portion of the general tax levy and 1% ad valorem tax is allocated

towards IFD funding, while the remaining amount is retained by state, local

and regional agencies. This figure also illustrates how CFD special taxes are

collected in addition to the 1%.

Figure 4: IFD and CFD Collection

Property Taxes Collected from Property

in IFD & CFD After Base Year

County of Riverside/ County of Imperial

Imperial County(40.1% of the Ad Valorem Tax Levy)

Riverside County(24.4% of the Ad Valorem Tax Levy)

State, Local, and Regional Agencies(59.9% of the Ad Valorem Tax Levy-Imperial)

(75.6% of the Ad Valorem Tax Levy-Riverside)

Assessments, Charges, Fees

CFD Special Taxes

Portion of the 1% AdValorem Tax Increment

Allocated to IFD

Special Tax Levyby a CFD

General Tax Levy: 1%Ad Valorem Tax and

Other Charges




Supportable levels of Landside Development infrastructure

In order to estimate supportable Landside Development infrastructure costs,

the following analysis was prepared:

• Land residual analysis (See Exhibits I-17B-i and I-17B-ii of

Appendix 4)

• Review and analysis of an actual land development budget for a large

specific plan in the Feasibility Study Area

• Review and analysis of development impact and capacity fees in the

Feasibility Study Area

• The fees and costs are based on capital improvement plans for the

Coachella Valley Water District (“CVWD”), Imperial Irrigation District

(“IID”), Imperial and Riverside Counties, and local school districts

• Landside Development infrastructure is assumed to be funded

through a combination of:

o Mello Roos Community Facilities Districts (“CFDs”)

o Development Impact Fees

o Developer/Builder Funds

• Pricing and absorption are critical to supporting Landside

Development infrastructure costs

Based on the pricing level in the land residual analysis (see Exhibits I-17B-I

and I-17B-ii of Appendix 4), and land development budget review, funding of

a portion of Seaside Improvements with supportable/feasible levels of

Landside Development could be achieved.

CFD Funding Analysis

• Based on the 50 years of Landside Development, CFD bonding

capacity analysis was prepared for both counties

• Assumes a 1.60% total tax rate, 6.50% interest rate and 30 year bonds

• Represents residential CFD tax only for purposes of this Financial

Feasibility Analysis

• Exhibit L of Appendix 1 contains the detailed calculation and

supporting assumptions

Table 18 summarizes the CFD funding analysis, by county.




Table 18: CFD Bond Proceeds

2.5 Summary of Supporting ExhibitsSupporting details for the financial feasibility analysis are provided in

Appendix 1 found in Benchmark 5: Infrastructure Financing Feasibility

Analysis, Volume 2, Appendices. The information provided in Appendix 1

includes the detailed calculations and assumptions. It is comprised of exhibits

that flow together to calculate the estimated Landside Development revenue

sources and the capacity to fund Seaside Improvement costs with such

revenues. A summary of those exhibits is provided in Table 19.

Riverside County Imperial County

Phase 1

(Opportunity Areas

1, 2, and 2a)

Phase 2 & 3

(Opportunity Areas

3, 4, 5 and 6) All Phases

Residential Units 51,750 22,000 73,750

Total Net Construction Bond Proceeds ($ Millions) 630.4$ 255.0$ 885.4$

Total Net Construction Bond Proceeds per Unit 12,181$ 11,592$ 12,006$




Table 19: Summary of Financial Feasibility Analysis Exhibits

Chart/Exhibit inAppendix 1* Exhibit Name Description

ChapterRef

1 Total Cumulative IFD TaxIncrement

• Graphic illustration of cumulative tax incrementgenerated by Landside Development in RiversideCounty and Imperial County

ExecSummary

2 Total Cumulative FundingSources

• Graphic illustration of cumulative revenue sourcesgenerated by Landside Development in RiversideCounty and Imperial County

ExecSummary

3 IFD Bond Interest Rate, TOT andSales Tax Summary of Tradeoffs

• Estimated impact on Landside Development revenuesources assuming the following:o IFD bond interest rate ranging from 7.0% to 5.0%o % TOT and sales tax available to fund Seaside

Improvements ranging from 100% to 25%

2.12.2.42.2.5

A Salton Sea IFD Sources and UsesSummary

• Summary of key revenue sources and uses forScenarios 1 and 2

• See further discussion Scenarios 1 and 2 in Chapter 2.1

2.1

B Gap Model 5 Year Summary • Calculates the Funding Gap between the time SeasideImprovement costs are incurred and LandsideDevelopment revenue sources become available

• Illustrates the following:o Seaside Improvement and Landside

Development periodso IFD Tax Incremento Seaside Improvement costso Landside Development revenue sourceso Loan additions and pay-off calculations

• Summary is shown in 5 year increments

ExecSummary2.4

C Gap Model • Same calculation as Exhibit B

• Amounts are modeled annually over a 50 year LandsideDevelopment period

2.4

D Bond Sizing – Riverside &Imperial

• Calculates the estimated IFD net bond proceeds forRiverside and Imperial Counties

• Assumes 30 year bond terms commencing with the firstyear of Landside Development (See discussion of EIFDvs IRFD legislation in Appendix 1, Exhibit M)

• Assumes an IFD bond interest rate of 6.0%.

• Additional assumptions are included on Exhibit D.

2.2.2

E-Riv Projected Infrastructure FinanceDistrict Revenues - Riverside

• Calculates the estimated Net Revenues for IFDs forRiverside County

• Pulls value additions from Market Study and Land UseAnalysis (See Appendix 4, Exhibit I-15A and I-15B)

• Assumes 24.38% full IFD allocation of 1%

• Assumes 50% of IFD allocation of 1% allocation isavailable for IFD funding purposes for Scenario 1 and25% for Scenario 2

2.2.15.35.4

E-Imp Projected Infrastructure FinanceDistrict Revenues - Imperial

• Calculates the estimated Net Revenues for IFDs forImperial County

• Pulls value additions from the Market Study and LandUse Analysis (See Appendix 4, Exhibit I-15A and I-15B)

• Assumes 40.05% full IFD allocation of 1%

• Assumes 50% of IFD allocation of 1% allocation isavailable for IFD funding purposes for Scenario 1 and25% for Scenario 2

2.2.15.35.4

*Appendix 1 can be found in Benchmark 5: Infrastructure Financing Feasibility Analysis, Volume 2, Appendices




Table 19: Summary of Financial Feasibility Analysis Exhibits (Continued)

Chart/Exhibit inAppendix 1 Exhibit Name Description

ChapterRef

F New Additions to Value • Summarizes the annual residential and non-residential value additions for Riverside andImperial Counties over the 50 year LandsideDevelopment period

• Based on absorption and value estimates from theMarket Study and Land Use Analysis (See Appendix4, Exhibit I-15A and I-15B)

2.25.35.4

G New Construction -Residential

• Illustrates the annual residential absorption forRiverside and Imperial Counties over the 50 yearLandside Development period


2.25. 3

H New Construction - NonResidential

• Illustrates the annual non-residential absorptionfor Riverside and Imperial Counties over the 50year Landside Development period


2.25.3

I-Riv TCG ProjectedInfrastructure FinanceDistrict Revenues -Riverside

• Summarizes the annual residential and non-residential absorption, values, and timing forRiverside County

• Based on the Market Study and Land Use Analysis(See Appendix 4, Exhibit I-15A)

2.22.2.15.35.4

I-Imp TCG ProjectedInfrastructure FinanceDistrict Revenues - Imperial

• Summarizes the annual residential and non-residential absorption, values, and timing forImperial County

• Based on the Market Study and Land Use Analysis(See Appendix 4, Exhibit I-15B)

2.22.2.15.35.4

J Calculation of Sales TaxRevenues

• Summarizes the annual estimated sales taxrevenues from the Tourist Demand Impact Analysis(See Appendix 2, Exhibits 3A-3C)

• Assumes full sales tax allocation is available forfunding purposes

2.2.53.4

K Calculation of TransientOccupancy Tax Revenues

• Summarizes the annual estimated TOT revenuesfrom the Tourist Demand Impact Analysis (SeeAppendix 2, Exhibits 1 and 2)

• Assumes full TOT allocation is available for fundingpurposes

2.2.43.4

L CFD Capacity Analysis • Calculates the estimated CFD bonding capacityavailable to fund Landside Developmentinfrastructure costs

• Assumes a 1.60% total tax rate

• Assumes a 6.50% CFD bond interest rate

2.5

M IRFD vs. EIFD Memorandum • Shows a side by side comparison of key differencesbetween an IRFD and EIFD based on currentlegislation

2.3


3.0 Tourism Demand Impact Analysis

Estimates of the scale and type of development are needed to determine

the possible funding sources. This section identifies the potential scale

and type of development that is anticipated for the three regions. After

the scope of these two objectives is explained, the implications in each

region are discussed and key charts, graphs, and figures are presented.

3.1 IntroductionTourist Demand Impact Analysis within the Opportunity Areas of the Salton

Sea project was developed in three reports using a 40 year period from 2022-

2062. The last year was extended unchanged annually to estimate potential

infrastructure financing through FY 2074-2075. The northern and southern

areas were assumed to start being ready for tourists in 2022.

3.2 Tourist Demand Forecast, North Area, 2022-2075The total economic impact on the full Coachella Valley (CV) of developing a

10 square mile fresh water lake at the northern end of the Salton Sea, in

Riverside County, was evaluated. The analysis began by studying the spending

potential at a 100% capture rate of all 2015 tourists currently going from Los

Angeles, Orange, Riverside, San Bernardino counties to the six existing lakes

(Havasu, Mohave, Perris, Silverwood, Big Bear, Elsinore) most likely to be use

instead of the Salton Sea Lake-North (SSL-N):

• Metrics for these competitor lakes were determined including their

distances from population centers in each county, driving time,

surface acreage and recent estimates of Southern California visitors

to them (1,877,901). Calculations of the share of these tourists likely

coming from each county were based upon its share of the 2015

population (17,743,546) and share of Southern California’s 2015

registered watercraft (217,192). These two distributions were then

weighted, treating a county’s share of watercraft as three times more

important than its share of people.

• Next, the average days a user of SSL-N would likely stay per visit were

estimated based upon studies of the length of time users stayed at

various lakes and their distance from population centers. These were

reduced to be conservative. The averages used were 3.5 days from

3.0 Tourism DemandImpact Analysis

3.1 Introduction

3.2 Tourist DemandForecast, NorthArea, 2022-2075

3.3 Tourist DemandForecast, SouthArea, 2022-2062

3.4 TransientOccupancy andSales Taxes, 2022-2075,



Tourism Demand Impact

Los Angeles and Orange counties; 2.0 days from the inland counties.

This resulted in the 1,877,901 tourists estimated to spend 5,611,799

lake-visitor days in 2015.

• To calculate average economic impact per CV visitor per day, an

extract was made from work by this economist for Coachella Valley

Association of Governments on its CV/Link project. It used a CA

Office of Tourism survey of 2010 tourist groups to calculate average

direct CV spending for the average tourist group. Updating that work

to 2015 meant direct spending would be $976.06 per tourist party.

Once those dollars entered the CV economy, they were estimated to

change hands locally as workers were hired and supplies and services

purchased by the firms initially receiving the money. For every $1.00

in direct tourist spending, another $0.435 in additional local spending

was created in this way. The $976.06 from direct spending thus

would create total local economic activity of $1,400.58 per tourist

party.

• Research on users of Lake Tahoe and the Sacramento-San Joaquin

Delta found that a typical party was 3.0 members. Dividing tourist

group spending by that figure resulted in an estimated $466.86 per

lake using tourist per day.

• Combining the number of tourist days of 561,799 with the $466.86 in

economic impact per day yielded a maximum 100% lake tourist

capture of $2.6 billion in 2015.

It was necessary to move beyond this 2015 estimate to forecasting for the

2022 to 2074-2075 study period:

• Population for the four counties was forecasted from 2015-2062

based upon data from the Southern California Association of

Governments (2015-2040), and CA Department of Finance

Demographic Research Unit (2040-2062). From 2062 to 2074, the

population was conservatively assumed unchanged, as no

forecasting source was available. It moves the total to 22,004,146,

up 4,260,000 or 24.0% and stays there. Pleasure vessels were

forecast to remain the same share of population as they did in 2015.

Combined, these data changed the mix of the share of total tourists

likely to use the SSL-N because the inland counties would be adding

people and vessels faster than the coastal counties. The result was

to raise the number of potential lake using tourists year by year from

1,877,901 in 2015 to 2,328,824 in 2062, up 450,924 or 24.0%, with

that figure remaining unchanged through 2074-2075.



Tourism Demand Impact_

• Capture rates below 100% were estimated annually for each of the

six competitor lakes based upon their characteristics and distances

from the four Southern California counties. Capture begins at 10%

for all lakes in 2022, assuming construction starts in 2017 and it takes

five years to build a fresh water SSN-L. Lake Havasu and Lake Mohave

have the fastest growth and longest increases in capture rates due to

driving times that are over two hours more than to SSL-N with

maximum capture at 75% in 2060. Lake Perris has a relatively rapid

increase in capture rate to a maximum of 50% in 2042 due to its

cramped size, on-going crowding, safety and water quality problems

but close-in location. Lake Elsinore has a modest capture rate

increase to a maximum of 40% in 2050 due to water quality issues,

but a specialized range of skiing and racing activities and close-in

location. Big Bear Lake and Lake Silverwood have relatively slow

assumed increases in capture rates due to their mountain locations

with maximums at 30% in 2042.

• The result was for the CV area to begin with 196,016 lake using

tourists in 2022 rising to 1,212,923 by 2062 and remaining there. The

number of visitor days would increase year by year from 581,824 in

2022 to 3,491,441 in 2062 and staying there. Seen another way, the

average daily estimated tourists using SSL-N in a 365-day year would

go from a daily average of 1,594 in 2022 to 9,566 in 2062 through

2075.

• Using the $466.86 estimate of daily tourist economic impact shows

that total spending in CV from capture of visitors from other lakes

would vary from $271.6 million in 2022 to $1,630.0 million ($1.6

billion) in 2062. That maximum figure would remain unchanged

through 2074-2075.

• Meanwhile, the unique Salton Sea State Recreational Area (SRA) has

always lured tourists on its own. In the early 2000s, this annually

ranged from 200,000-300,000, equal to 1.289% of the four county

population. That plunged to an average of 46,393 from FY 2012 to FY

2014 as the sea’s environmental issues increased. To look at the

potential for this group to grow, it was assumed that the 46,393

remained constant until the two fresh water lakes and connecting

channel opened in 2022. In 2021, that would represent the

equivalent 0.209% of the four county area population. It is estimated

that 83.0% of this represented 38,501 tourists based upon the share

the four northern counties makeup of the six total counties (including

Imperial & San Diego) generating most lake tourists.




• Once environmental issues begin lessening, the flow of tourists

choosing to come to the Salton Sea SRA should begin normalizing. It

is assumed that takes eight years to go from 0.209% of four county

population in 2021 back to 1.289% by 2029 and remains there

through 2062. The tourists coming from the four counties would be

58,668 tourists by 2022, an added 10,165 visitors over 2021. By 2029,

the number would reach 303,531, up an added 212,487 from 2021.

The gain would continue from there, moving up with population.

• With each independent tourist assumed to make a 2.0-day trip, the

number of visitor days for new tourists would rise from 20,330 in

2022 to 424,973 in 2029, go on year by year to an extra 491,333 by

2062, and remain at that level until 2075. Each of these visitor days

would add tourist spending into the CV mix. The economic impact of

them was lowered to $397.86 per person per day, based on removing

the boating element from the spending array used with lake using

tourists. The result would add CV area tourist impact spending year

by year, going from $8.1 million in 2022 to $196 million in 2062 and

remaining there until 2074-2075.

• Added together, the economic impact of captured lake tourists from

competitor areas with the added tourists independently visiting the

Salton Sea SRA yields the grand total economic impact of the SSL-N

on the CV area. It would move from $280 million in 2022, rising year

by year to $1,825 million ($1.8 billion) by 2062 and staying at that

level until 2074-2075. In the first five years from 2022-2026, the

cumulative economic impact would be $1,952 million or $1.95 billion.

That is more in the opposite direction than the -$1.7 billion loss

forecasted in 5 years by a late 2014 study prepared for the Greater

Palm Springs Convention & Visitors Bureau on the impact of the

lake’s ecological decline.

3.3 Tourist Demand Forecast, South Area, 2022-2062The total impact on the full Imperial County (Imperial) of the development of

a 20 square mile fresh water lake at the south end of the Salton Sea was

evaluated. The major source of lake tourists and spending coming to the SSL-

S would be expected from San Diego County. The assumption is that Imperial

users would likely be day tourists since the distances from the county’s

population center to the lake’s edge averaged just 33 miles or 35 minutes

driving time. Their spending is conservatively viewed as already part of the

Imperial County economy, not an addition to it:

• For San Diego County, the basis for tourism spending at the SSL-S is

its distinctive similarity to Orange County. In 2015, they had similar

populations, registered pleasure crafts, ratios of pleasure craft to




population and per capita income, plus mileage and driving times to

their respective ends of the Salton Sea. It is thus assumed that the

tendency for San Diego County’s population to use the SSL-S is similar

to Orange County’s population tendency to use the SSL-N even

though SSL-S would be twice as large. The Orange County potential

lake visitors’ ratio to population was 13% in 2015. That factor is

applied to San Diego County’s population throughout the 2022-2062

period, with the 2062 level applicable to the rest of the forecasting

period through 2074-2075. In 2022, the figure would equal the

estimated population of 3,599,956 x 13.0% = 468,620 potential of San

Diego County lake visitors.

• The SSL-S would have competition from 23 reservoirs and lakes

throughout San Diego County. The grand total of these facilities

represented 18 square miles of surface area. However, only six have

over 1,000 acres of surface area, ranging from 1,100-1,562 acres.

Only one of these, El Capitan Reservoir, allows use of recreational

water activities beyond fishing.

• To determine the extent that the SSL-S would see these potential

visitors, the capture rate was assumed to be 10% in year one (2022)

due to the excitement of a new lake. It would increase by 1.5% per

year to reach a 20% capture rate in 2030 as tourists become

increasingly familiar with the site. The pace would add 2.0% per year

through 2055, reaching a 70% capture rate. The increase would be

consistent with more and more facilities being available for tourists.

It would advance 1% per year from there to 2062 with a maximum at

75%. In 2022, the number of estimated lake tourists would be

468,620 x 10% = 46,862. Given the long distance to the SSL-S, the 3.5

days stay for Orange County was used for San Diego County. In 2022,

the number of visitor days would be 46,862 x 3.5 = 164,017. Based

on a 365-day year, the count of lake tourists per day in 2022 would

be 449.

• For each tourist visitor day, the economic impact was calculated at

$339.99. With an estimated 164,017 tourist days in 2022 that would

yield $55.8 million in total local affect that year. The $339.99 figure

was estimated by adapting the direct spending per tourist group

estimated for the SSL-N to the lower costs conditions in Imperial after

reviewing the costs of goods and service in Palm Desert versus El

Centro. Specifically, the hotel room rate was reduced to an average

of $65 per group. Casino spending was eliminated. Eating and

drinking costs were reduced -10%. Other items except food and fuel

were reduced by -15%. The result was direct spending of $710.82 per

tourist party. As with CV, each $1.00 of outside tourist money




reaching Imperial is seen as causing an added $0.435 in added local

spending. The total local economic impact would be $1,019.98 per

tourist party of 3.0 people or $339.99 per lake using tourist per day.

• By 2062, the number of lake tourist days would reach 1,549,821 x

$339.99 = $529.9 million in total economic impact. This level would

also apply through 2074-2075. In the first five years, the total impact

of lake using tourists would be $355.6 million.

• Meanwhile, there would an increase in tourists independently going

to the Salton Sea SRA from San Diego County. Based upon the

calculations for the SSL-N, 58,668 total tourists would be going to the

Salton Sea to enjoy its unique surroundings, with 83.0% coming from

the northern 4 counties and 17% from San Diego County. That would

be 10,002 tourists by 2022, an added 2,110 visitors over 2021. By

2029, the number would reach 52,544, up an added 44,652 from

2021. The gain would continue from there, moving upward with

population growth.

• With each independent tourist assumed to make a 2.0-day trip, the

number of visitor days for these new tourists would rise from 4,221

in 2022 to 89,304 in 2029 and go on year by year to an extra 110,029

by 2062. Each of these visitor days would add tourist spending into

the Imperial economy. Their economic impact was lowered to

$277.90 per person per day, based on removing the boating element

from the spending array used with southern lake using tourists. The

result would increase the economic impact on Imperial County of

tourists visiting the Salton Sea SRA from the south from $1.2 million

in 2022 to $30.6 million in 2062 through 2074-2075.

• Combined, the economic impact of the Salton Sea Project on Imperial

would start at $56.9 million in 2022, rising year by year to $557.5

million by 2062 and remaining there until 2074-2075. In the five

years from 2022-2026, the cumulative economic impact would be

$380.9 million.

3.4 Transient Occupancy and Sales Taxes, 2022-2075,The tourist spending estimates and capture rates were used to yield annual

tax estimates captured in Zones 1, 2, 2A. Annual tax estimates from Imperial

and capture rates were used to yield taxes captured in Zones 3-6. These are

combined to estimate the full Transient Occupancy Tax (TOT) and sales tax

impacts of the Salton Sea Project.

3.4.1 Transient Occupancy Tax Revenue

Total Salton Sea project related hotel visitor days from 2022-2062 were taken

from the modeling above. No rooms were assumed rented in the




Opportunity Areas from 2017-2024 since entrepreneurs will likely be

skeptical of investing in hotel/motel facilities until they see commencement

of Seaside Improvements. It then takes until 2022-2024 to get the first

facilities ready. The annual hotel visitor demand was divided by 3.0 visitors

per party to estimate total annual hotel room demand.

From 2024-2075, capture rates of the CV area were assumed to start for zone

groups 1, 2, 2A at 5% and in zones 3-6 at 10% for Imperial County. The rates

were gradually assumed to accelerate to 85% maximums. These were

respectively multiplied by the annual room demand in CV and Imperial to

yield the rooms captured in each zone group. The northern room rate began

at $100 and gradually rose to a $199 maximum; the southern rate began at

$65 and gradually reached $135 maximum. The total annual rooms in each

area times those rates yielded total room revenue. Using a 10% TOT rate in

the north and 8% rate in the south yielded the annual TOT levels.

Total TOT revenues from this process began at $177,506 in 2024 and grew to

$27,185,122 in 2062 through 2074-2075, with grand total TOT revenue from

the Salton Sea project of $920,383,945 for the forecasting period.

3.4.2 Sales Tax Revenue

Total Salton Sea project related retail sales by sector in the north and south

were taken from the earlier modeling. Hotel spending was omitted, as most

of that revenue is TOT generated. Casino spending was omitted as that is on

tribal lands. Food store sales were set at 0% as well even though most but

not all food store sales are tax exempt.

Capture rates by outlets in the two zones were assumed to start in 2022 as

retail developers would remain skeptical about completion of the two lakes.

Starting rates included food, beverage and dining (5%); boat related (25%);

general spending (5%); shopping, gifts and souvenirs (5%); gasoline (5%);

groceries (5%). These rates were assumed to grow at varying speeds with

most reaching 85%. Exceptions were maximums of 100% for boat related

spending and 90% for gasoline. Capture rates for entertainment,

transportation, amenities and parking spending were assumed to start and

grow at the hotel capture rates found in calculating TOT. Among types of

spending, differences in the speed of increase in capture rates varied in the

belief some demand would be satisfied longer in the balance of the CV and

Imperial markets.

Secondary sales capture rates in each were determined by the estimated

amount of direct sales captured each year, less boat sales divided by the

potential direct capture sales at 100%. Boat spending was eliminated, as that

category is particular to the lake.




The total sales captured each year were multiplied by the 1.0% sales tax rate

applicable to local government to estimate the incremental sales taxes

created by the project. The result showed sales tax revenue generated in the

Opportunity Areas as:

• $173,755 in 2022

• Growing to $14,956,343 in 2062 through 2074-2075

• Grand total sales tax revenue generation by the Salton Sea project of

$555,101,467.

However, to be very conservative, the retail sales taxes generated by the

secondary impact of tourist funds flowing into both the CV and Imperial areas

were omitted. This amounted to:

• $143,903 in 2022, down -$29,852

• Growing to $10,600,845 in 2062 through 2074-2075, down -

$4,355,499

• Grand total sales tax revenue generation by the Salton Sea project of

$393,371,085, down -160,730,382

• This conservative reduction amounted to 29.0% of potential sales

tax


4.0 Salton Sea Recreation Opportunities

This section identifies recreation opportunities to assist in determining

the tourism demand and estimated development capacity for the Study

Area. After the scope of these deliverables is explained, the implications

in each region are discussed and key charts, graphs, and figures are

presented.

4.1 IntroductionThe following Salton Sea recreation opportunities have been identifiedthrough various sources of current documentation and historical reports(Error! Reference source not found.). The land uses identified are eitherxisting recreational uses, or potential recreational uses that could occurbased on approved plans. It should be noted that the listed recreational usescould potentially be established anywhere adjacent to the lake area andfurther analysis of its feasibility and actual development will be necessary.

Figure 5: Salton Sea Recreation Opportunity Areas

4.0 Salton SeaRecreationOpportunities

4.1 Introduction

4.2 Opportunity Area 1



4.5 Opportunity Areas4 / 5


4.7 RecreationalOpportunitiesMatrix



Recreational Opportunities

These recreation opportunities have been identified to assist in determiningthe tourism demand and estimated development capacity for the Study Area.The recreational opportunities of the Salton Sea have been focused within sixareas of focus. Within the six Opportunity Areas more specific locations witha brief description of potential uses have been identified.

4.2 Opportunity Area 1Opportunity Area 1 is shown in Figure 6. Key recreational opportunity

locations within this area are discussed below.

4.2.1 North Shore Yacht ClubOriginally opened in 1959, The North Shore Yacht Club, was once California’slargest marina and very popular for boating and vacationing for theentertainment industry’s rich and famous and is now over fifty-five years old.In various states of use over the years, the marina being destroyed and closedin 1994. In 2010, the Salton Sea History Museum was located at the restoredfacility but has since closed for relocation. Currently its main use is acommunity center for the North Shore area residents. It is open to the publicand provides space for:

• Community events/Event Center

• Private events (weddings, parties)

• Meeting space area

Other potential activities and uses:

• Beach

• Marina/Boat Launch

• Hotel

• Museums/Cultural/Community Center

• Sports/Recreational facilities

• Hiking

4.2.2 Salton Sea State Recreation AreaSalton Sea State Recreation Area (SRA) covers approximate 14 miles of thenortheastern shore.In a January 2016 news release, the SRA announced that Varner Harborwithin the SRA is now open to provide access to the sea for boating and waterskiing. Other available Activities and Facilities at Salton Sea State RecreationArea per the current website information include:

• BOATING

o Boating

o Boat Ramps

o Kayaking

o Water skiing



Recreational Opportunities_

Figure 6: Opportunity Area 1




• OVERNIGHT FACILITIES

o En-route Campsites

o Family Campsites

o Group Campsites

o Hike or Bike Campsites

o Primitive Camping

o RV Sites w/Hookups

o RV Dump Station

o RV Access

• TRAIL USE

o Hiking Trails

• DAY-USE ACTIVITIES & FACILITIESo Historical/Cultural Siteo Picnic Areaso Environmental Learning/Visitor Centero Exhibits and Programso Fishingo Guided Tourso Interpretive Exhibitso Beach Areao Swimmingo Nature & Wildlife Viewingo Birdingo Photographyo Windsurfing/Surfingo Museumso Family Programso Geocaching

• OTHER FACILITIES & VISITOR INFORMATION

o Parking

o Restrooms / Showers

o Restrooms

o Drinking Water Available

4.3 Opportunity Area 2Opportunity Area 2 is shown in Figure 7. Discussions of key recreational

opportunity locations within this area follow.





4.3.1 Travertine PointTravertine Point is located adjacent to the western shoreline of the Salton Seaat the boundaries of Riverside County and Imperial County. The TravertinePoint Specific Plan document was approved in February 2012. The SpecificPlan area encompasses approximately 4,900 acres with multiple ownerships.

Planning Areas that are adjacent to Salton Sea Shoreline consist of open space(recreation), open space (water), and commercial tourist land usedesignations. The Torres Martinez Desert Cahuilla Indian Tribe owns theplanning areas directly adjacent to the shoreline and is currentlyundeveloped. Pursuant to the land use designations, permitted uses includethe following, but are not limited to:




• Boat launch

• Boating

• Camp Grounds

• Fishing

• Hotel

• Hunting

• Recreational Vehicles

• Scenic Viewpoint

• Museums, Cultural, Tourist Community Centers

• Picnic Grounds

• Sports and recreation facilities (e.g., parks, playgrounds, golf club,

country club)

• Equestrian, Riding/Stables

• Day/Medical Spas

4.3.2 Torres Martinez Tribe — Wetland HabitatThe Torres‐Martinez Desert Cahuilla Indian Tribe developed an 85‐acre wetland project at the mouth of the Whitewater River, where it enters theSalton Sea in 2009. The Wetland Habitat, provides the following:

• Educational programs/interpretive exhibits for natural water

treatment, habitat restoration, and sediment stabilization through

seven water quality cells and four habitat ponds.

4.3.3 Duck PondsThis delta area is mostly in private ownership and is adjacent to TorresMartinez Tribal land. Limited public access is available to this area. Waterfowlhunting has occurred within privately owned duck ponds within the area ofwhere the Whitewater River enters into the Salton Sea. (Source: Recreationand Economic Opportunities Assessment for the Salton Sea, California, DraftReport, August 12, 2005.). Other uses within the immediate vicinity includecrops and orchards. Recreational opportunities may include:

• Educational/interpretive exhibits associated with the Torres-

Martinez Indian Reservation

• Tribal gaming establishments, tribal resorts/marinas, private

resorts/marinas




• Potential to create a multiple use biking/hiking trail around the Sea’s

perimeter, which would require cooperation of numerous agencies,

entities, and stakeholders.

4.3.4 North Lake VillageThe North Lake Village was identified as a Village Core area within the “SaltonSea Master Development Plan” (Mooney, Jones, & Stokes, February 2006).Potential uses for this area may include:

• Beach

• Boat Launch

• Fishing pier/Fishing

• Hotel

• RV Park

4.3.5 Salton Sea North LakeThe Salton Sea North lake area of the “Perimeter Lake Plan” is an area suitablefor active water sports such as the following:

• Boating

• Water Skiing

• Windsurfing

• Kayaking

• Jet Skiing

4.4 Opportunity Area 3Opportunity Area 3 is shown in Figure 8. Key recreational opportunity

locations within this area are discussed below.

4.4.1 Desert ShoresDesert Shores is a residential community located within the Imperial CountyGeneral Plan’s West Shores/Salton City Urban Area which encompassesapproximately 34,000 acres. The Desert Shores community primarily consistsof single family and mobile home residences, with some support retail. It ismore specifically located adjacent to the western shoreline of the Salton Seaat the boundaries of Riverside County and Imperial County. Potentialrecreational opportunities for this area may include:

• Beach

• Boat launch

• Marina

• Picnic Grounds





4.4.2 Salton CitySalton City is residential community that originally began development in1958. The 19,000 acre community primarily consists of residential uses andwas originally developed with a small airport and golf as well as hotel-motels,restaurants and bars, market and gas, in close proximity to Highway 86.Other public service facilities include a post office, fire and sheriffdepartment, churches, parks, school and library. The community is locatedwithin the Imperial County General Plan’s West Shores/Salton City UrbanArea. Salton City is located adjacent to the western shoreline of the SaltonSea at the boundaries of Riverside County and Imperial County. Potentialrecreational opportunities for this area include:




• Beach

• Boat launch

• Marina

• Picnic Grounds

• Off-roading

• RV Park

4.5 Opportunity Areas 4 / 5Opportunity Areas 4 and 5 are shown in Figure 9. Key recreational

opportunity locations within this area are discussed below.

4.5.1 South Lake VillageThe South Lake Village is located at the southern end of the Salton Sea,adjacent to the recreational estuary lake of the Perimeter Lake DesignConcept (Tetra Tech), and the Sonny Bono National Wildlife Refuge (NWR).The majority of this area is primarily used for agriculture. Much of thefarming operations involves cooperative farmers and some of the cropsgrown serve as part of the resource management program of the Sonny BonoNational Wildlife Refuge for consumption by wintering waterfowl. The SouthLake Village is just south of the potential Village Core location in the SaltonSea Authority Master Development Plan analysis (Mooney, Jones, andStokes). The South Lake Village location in relation to the recreationalopportunities of the Sonny Bono NWR and other areas such as the Red HillMarina, this Village could provide the following recreational opportunities:

• Bird watching

• Hiking

• Scenic View Point

• Beach

• Boat launch

• Marina

• Picnic Grounds




Figure 9: Opportunity Areas 4 and 5

4.5.2 Sony Bono National Wildlife RefugeThe 37,900 acre Sonny Bono National Wildlife Refuge (NWR) was originallyestablished in 1930. It serves to protect and manage habitat to supportmigratory birds, particularly waterfowl, and other wildlife. The Refuge iscurrently managed by the United States Fish and Wildlife Service. The Refugeis over 37,000 acres and is located in the southern portion of the Salton Seain three general locations. The largest area is open water in the southernportion of the Salton Sea. The area described as “Unit 1” (3,782 acres) islocated along the southern tip in the area south of Bruchard Bay. The areadescribed as “Unit 2” (2,025 acres) is located near the terminus of the AlamoRiver and is where the Refuge headquarters is located. The U.S. Fish andWildlife Service prepared a Comprehensive Conservation Plan (CCP) that




provides the long-term goals for the Refuge. The CCP includes the Refugearea and indicates that agricultural uses in the area serve as waterfowlforage. Duck ponds, managed habitats on the Refuge, and fish farms are alsoconsidered permanent crops. Public recreational opportunities listed fromU.S. Fish and Wildlife Service’s website include:

• Hiking

• Birding

• Scenic View Point

• Picnic Grounds

• Boat Launch

• Hunting (limited areas)

• Fishing (limited areas)

4.5.3 Salton Sea South LakeThe Salton Sea South lake area adjacent to the 32,410 acre Sonny Bono SaltonSea National Wildlife and the South Lake Village area may be suitable foractive water sports such as the following:

• Boat Launch

• Boating

• Water Skiing

• Windsurfing

• Kayaking

• Jet Skiing

4.6 Opportunity Area 6Opportunity Area 6 is shown in Figure 10. Discussions of key recreational

opportunity locations within this area follow.





4.6.1 Bombay Beach CommunityBombay Beach is designated by the Imperial County General Plan as arecreation/retirement community located off of Highway 111, on the easternshore of the Salton Sea, and is located just south of the Salton Sea StateRecreation Area. Once a burgeoning resort community in the 1950’s and 60’s,with homes, hotels, beach, it is currently a small residential community thatconsists primarily of single family and mobile homes, a community center,library, medical clinic, marina, park and church.




Recreational uses for this area may include:

• Beach

• Boat launch

• Picnic Grounds

• Off-Roading

• RV Park

• Day/Medical Spa

4.7 Recreational Opportunities Matrix

A matrix illustrating the recreational opportunities throughout the studyarea is shown in Table 20.




Table 20: Recreational Opportunities Matrix

Activities

Tra

vert

ine

Po

int

No

rth

Lake

Vill

age

No

rth

Sho

reY

ach

tC

lub

Salt

on

Sea

Re

cre

atio

n

Are

a

Du

ckP

on

ds

To

rre

sM

arti

nez

We

tlan

d

Hab

itat

Salt

on

Sea

No

rth

Lake

De

sert

Sho

res

Salt

on

Cit

y

Sou

thLa

keV

illag

e

Son

ny

Bo

no

Nat

ion

alW

ild

life

Re

fuge

Bo

mb

ayB

eac

h

Salt

on

Sea

Sou

thLa

ke

Beach X X X X X X X X X

Bike Trail X

Bird Watching/Photography

X X X X

Boat launch X X X X X X X X X X X

Boating X X X X

Bridge

Camp Grounds X X

Day/Medical Spas X X

Equestrian use X

Fishing X X X X X

Fishing Pier X

Hiking X X X

Hotel/Motel X X X

Hunting X X X

Jet Ski X X

Kayak X X X

Off-Roading X X

Marina X X X X

Museums, Cultural,Tourist, Community,Event Centers

X X X

Picnic Grounds X X X X X X X

RV Park X X X X X

Scenic Viewpoint X X X

Sports Facilities: (parks,playgrounds, Golf Club,Country Club

X X

Water skiing X X X

Wind Surfing X X X


5.0 Market Study and Land-Use Analysis

The market study and land-use analysis was conducted to determine

whether Salton Sea management efforts would provide recreationally

attractive water that would support sufficient development to fund

infrastructure through an EIFD, or possibly other property related

assessment districts. A summary of the findings concerning this issue

are presented in this section.

5.1 IntroductionThe Market Study and Land Use Analysis analyzed the market depth and

potential impact of the Salton Sea Management Plan. The Phase I analysis

focused on Opportunity Areas 1 & 2, and 2a. Phase II focused on Opportunity

Area 3, the area to the west of the Salton Sea in Imperial County from the

county border down to the southern edge of Salton City. Phase III focused on

Opportunity Areas 4, 5, and 6. Detailed market surveys were conducted and

extensive data was gathered to assess future supply and demand conditions

for both residential and non-residential land-uses as well as achievable home

prices and commercial lease rates under the condition of a managed lake. The

following is an executive summary of the findings and conclusions for planned

and potential development, market demand, absorption/development

timeline, and the value of landside development resulting from the

management plan.

5.2 Scale of Future DevelopmentTwo methodologies were utilized to determine the total scale of future

development within each Opportunity Area. Projects in the development

pipeline were identified and assigned a “Completion Likelihood” for each

status in order to weight the probability of them coming to market. For the

remaining land area with no current development plans, the total acreage of

developable land remaining was determine and allocated portions of the

developable land to be used for residential, commercial, open/public space

and potential infrastructure. This step was necessary to account for the

anticipated development activity within the opportunity areas to be caused

by the Salton Sea Management Plan.

5.2.1 Riverside County

The Opportunity Areas (1, 2, and 2a) in Riverside County, particularly along

the northwest quadrant of the Salton Sea, have 18 projects either currently

5.0 Market Study andLand-UseAnalysis

5.1 Introduction

5.2 Scale of FutureDevelopment

5.3 Demand Captureand AbsorptionPotential

5.4 Value of LandsideDevelopment



Market Study and Land Use

selling or planned. This is because as land becomes more expensive and

homeowners get priced out of the western Inland Empire, development

grows towards the south and south east of the Coachella Valley. Nearly 79%

of the 36,549 units planned are located within the development plans of the

following, Travertine Pointe (16,655 units), Kohl Ranch (7,171 units),

Panorama (2,560) and Thermal 551 (2,354 units) which total 28,740 units

between them.

There are a total of 111,559 potential future residential units and 38,825,017

square feet of potential commercial supply in the Opportunity Areas within

Riverside County. The breakdown is as follows:

• Total Planned Units (in the pipeline) = 36,549

• TCG Estimated Units (Total Planned x Completion Likelihood) =

31,711

Total Developable Acres (NOT in the pipeline) is shown in Table 21.

The total Potential Future Residential Supply (Units) is 111,559 units as shown

in Table 22.

Total Potential Future Commercial Supply (Square Feet): 38,825,017 square

feet.

Table 21: Total Developable Acres



Market Study and Land Use_

Status Opportunity Area 3

Currently Selling 0

Undeveloped Lots 17,002

Approved MPC 139

Approved Tract 0

Pending 0

17,141

Table 23: Opportunity Area 3

Table 22: Total Potential Future Residential Supply

5.2.2 Imperial County

The western area of the lake’s future development will be driven by the West

Shores/Salton City Urban Plan, a lakeside plan comprised of the townships of

Desert Shores, Vista del Mar Estates, Salton City and the long-time stalled

Habitat 2000 Specific Plan. This Urban Plan stretches from the county border

to the southern tip of Salton City and makes up Opportunity Area 3. The

remainder of opportunity areas in Imperial County have no plans in the

pipeline.

There are a total of 129,025 potential future residential units and 51,221,379

square feet of potential commercial supply in the opportunity areas within

Imperial County. The breakdown is as follows:

Opportunity Area 3 (Table 23)

• Total Planned Units (in the pipeline and zoned lots) = 18,051

• TCG Estimated Units (Total Planned x Completion Likelihood) =

17,141




The Urban Area Development Breakdown is shown Table 24.

Other Urban Area Vacant Parcel Development (Zoned by Imperial County):

3,345 units

The Total Potential Future Residential Supply (Units): 20,486 units (Table 25).

The total Potential Commercial Supply (Square Feet) is 6,896,607 square feet.

Opportunity Areas 4, 5, and 6 (Table 26 and Table 27)

• Total Planned Units (on the books and zoned lots) = 0

• Remaining developable land breakdown:

• Total Potential Future Residential Supply (Units) : 108,539 units

• Total Potential Future Commercial Supply (Square Feet): 44,324,772

square fee

Townships/Specific Plan Acres

Salton City 13,715.8

Desert Shores 436

Salton Sea Beach 193

Habitat 2000 1,720

Total 16,065 acres

Land Use Breakdown

Urban Area

Total

Acres Units/SF

Residential 3,428.1 17,141

Commercial 527.7 6,896,607

Public Facility (Park) 2,253.6

Open Space 621.4

Roads 811.1

Table 24: Opportunity Area 3 Urban Area Development

Opportunity Area 3 Mix

Planned 17,141 84%

Vacant Parcels 3,345 16%

Total: 20,486 100%

Table 25: Opportunity Area 3 Planned and Vacant Parcel




5.3 Demand Capture and Absorption PotentialForecasts for macroeconomic demand drivers such as population,

employment, and average income were analyzed in order to forecast demand

and estimate the potential capture for the Opportunity Areas. The

relationship with 2016 demand driver values and 20-year average home sales

(for residential demand), commercial space (for industrial, retail, and office

demand), and hotel rooms (for hotel demand) were analyzed to derive an

annual demand potential. Opportunity Area captures were derived from

analyzing historical capture rates and forecasting the effect of the Salton Sea

Management Plan.

Opportunity Area

4 (1) 5 6

Total Land 36,529.4 26,609.9 39,068.6

Planned MPC Acreage 0.0 0.0 0.0

Remaining Land 36,529.4 26,609.9 39,068.6

% Developable 14% 51% 68%

Developable Land (1) 5,044.8 13,528.5 26,651.5

Land Use Breakdown (2)

Opportunity Area (Acres) Opportunity Area (Units/SF)

4 (1) 5 6 4 (1) 5 6

Residential 3,026.9 8,117.1 15,990.9 12,108 32,468 63,964

Commercial 378.4 1,014.6 1,998.9 4,944,413 13,259,247 26,121,113

Public Facility (Park) 756.7 2,029.3 3,997.7

Open Space 529.7 1,420.5 2,798.4

Roads 353.1 947.0 1,865.6

(1) Excludes Salton City Urban Plan that encompasses the northern portion of Opportunity Area 4

(2) Based on TCG experience and interviews for approved land use designations

(3)Units for Residential (3.0 du/AC), SF for Commerical (30% FAR)

Table 26: Opportunity Areas 4, 5, and 6 Developable Land Breakdown

IV. Total Potential Residential Units

Opportunity Area

4 5 6 Total

Developable 12,108 32,468 63,964 108,539

Total: 12,108 32,468 63,964 108,539

Table 27: Opportunity Areas 4, 5, and 6 Total Potential Residential Units





Demand Capture

• Annual Residential Demand = 1,035 units

o Equivalent to a 45% capture of forecasted annual demand for

the Coachella Valley (2,300 units)

• Annual Non-Residential Demand = 227,000 square feet


the Coachella Valley (495,000 square feet)

Absorption Potential (2018-2075)

• Absorption is assumed to begin 8 years after the start of construction

(Year 2025-2026)

o The majority of absorption will occur in Opportunity Area 2a

due to the normal path of growth from West to East and

before the completion of the Salton Sea Management Plan

o Absorption will move towards the Salton Sea over time due

to the management plan and continued path of growth

• Total anticipated residential absorption (2025-2075) = 51,750 units

• Total anticipated non-residential absorption (2025-2075) =

11,350,000 square feet


Demand Capture

• Annual Residential Demand = 440 units


Imperial County (800 units, above 20-year average of new

home closings of 601)

• Annual Non-Residential Demand = 53,200 square feet


Imperial County (206,000 square feet)

Absorption Potential (2018-2075)

• Absorption is assumed to begin 8 years after the start of construction

(Year 2025-2026)

o Opportunity Area 3 will receive a greater portion (55% of

residential and 57% of non-residential) due to existing

infrastructure in the West Shores/Salton City Urban Plan




• Total anticipated residential absorption (2025-2075) = 22,000 units

• Total anticipated non-residential absorption (2025-2075) = 2,660,000

square feet

5.4 Value of Landside DevelopmentNew and resale residential price trends in the Coachella Valley, Imperial

County and communities surrounding other lakes in California were

researched and analyzed to understand achievable price and lease rates for

development within the opportunity areas.


• Average Home Price = $270,001

o Positioned between Indio/Coachella median new home price

and resale price due superior development within the cities

• Weighted Non-Residential Value = $168/sf

o Positioned in-line or slightly above Coachella/Indio pricing

for centers within residential cores


The 2015 average resale price in Imperial County ($178K) is a 40% discount

to 2015 average resale price in the Coachella Valley ($294K). Non-residential

product in Imperial County is a 20%-40% discount to the Coachella Valley. The

discount for the Imperial County Opportunity Areas, however, is significantly

less due to their prime location next to the Salton Sea.

The weighted average value is $224,163 per unit for residential product and

$170/sf for non-residential value. The breakdown is as follows:

Opportunity Area 3


o Positioned at a 10% discount to Riverside County

Opportunity Areas ($270K) due to existing infrastructure and

planned Travertine Pointe’s ability to increase value


o Positioned at a 5%-15% discount to Riverside County

opportunity areas, slightly less than half the Imperial County

10-year average versus Coachella Valley




Opportunity Areas 4, 5, and 6


o Positioned at a 20% discount to Riverside County

Opportunity Areas


o Positioned at a 10%-20% discount to Riverside County

opportunity areas, slightly more than half the Imperial

County 10-year average versus Coachella Valley


6.0 Bibliography

Imperial Irrigation District and County of Imperial, Salton SeaRestoration and Renewable Energy Initiative, Framework for aSmaller Sustainable Salton Sea, Executive White Paper, Draft -July 2015

Mooney, Jones, and Stokes, Salton Sea Master Development Plan,February 2006

North Shore Yacht Club Web Information(http://www.palmspringslife.com/Palm-Springs-Life/April-2013/At-Salton-Sea-North-Shore-Yacht-Club-is-Alive/)

Rosenow Spevacek Group (RSG), Tax Increment Financing FeasibilityStudy, Prepared for the Salton Sea Authority, October 10, 2003

Salton Sea Authority, Recreation and Economic OpportunitiesAssessment for the Salton Sea, California, Draft - August 2005

Salton Sea State Recreation Area Website(http://www.parks.ca.gov/?page_id=639)

Tetra Tech, Salton Sea Funding and Feasibility Action Plan, Benchmark3: Evaluation of Alternatives With Respect to ExistingConditions, June 2015.

Tetra Tech, Salton Sea Funding and Feasibility Action Plan, Benchmark4: Conceptual Plans and Cost Estimates, Volume 2: Smaller SeaOptions – Perimeter Lake Concept, Draft – February 2016.

Travertine Point Specific Plan (Riverside and Imperial County),February 2012 - Final

U.S. Fish & Wildlife Service, Pacific Southwest Region, and SonnyBono Salton Sea National Wildlife Refuge Complex, (approvedMarch 6, 2014) “Final Sonny Bono Salton Sea National WildlifeRefuge (NWR) Complex Comprehensive Plan and EnvironmentalAssessment (EA)”

U.S. Fish and Wildlife Service Website for Sonny Bono Salton SeaNational Wildlife Refuge Website(http://www.fws.gov/refuge/sonny_bono_salton_sea/)

6.0 Bibliography

http://www.palmspringslife.com/Palm-Springs-Life/April-2013/

salton sea funding and feasibility action plan

Documents